Market Review

Malaysia: The FBM KLCI (-0.80%) Closed Lower in Line With the Mostly Negative Regional Markets’ Performance; the Index Was Dragged by Profit Taking Activities in Selected Banking Heavyweights. On the Broader Market, the Energy Sector (+0.67%) Was the Top Gainer, While the Healthcare Sector (-1.56%) Declined.

Global markets: Wall Street ended higher on the back of the strong rally in mega cap stocks, but the gains were limited as investors were waiting for the upcoming CPI data and banks’ earnings. The European stock markets ended lower, while Asia ended mostly lower, but Nikkei finally reaching a 33-year high above the 34,000 level.

The Day Ahead

As expected, the FBMKLCI took a pause after the rally, snapping the 6-day winning streak as profit taking activities emerged within selected Banking and Utilities heavyweights. Meanwhile, the US stock markets closed higher for the session in anticipation of the CPI (later tonight) and PPI (Friday) data that will be released this week. Over to the crypto segment, the SEC has approved 11 spot Bitcoin exchangetraded funds (ETF) and it has contributed to the positive sentiment for the crypto markets. For Brent oil, the price continues to hover around the USD76/bbl mark as the rising US inventories offset the concerns over in the Middle East.

Sectors focus: On the sectorial wise, we expect the buying interest within the Technology sector could sustain with the recovery on Wall Street. We believe overall, the Johor-theme, potential revival in the mega infra projects could provide support towards the Construction and Property sectors after taking a mild breather. We also favour the Building Material as a proxy towards the previous mentioned sectors, while the Consumer segment is likely to head for a decent recovery. In the US, we expect crypto related stocks should bode well with the approval of Bitcoin spot ETFs by the SEC.

The FBM KLCI ended lower after 6 days of consecutive gains. The technical readings on the key index were positive, with the MACD Histogram extending another positive bar, while the RSI dropped but maintains above the 50 level. The resistance is envisaged around 1,500-1,510 and the support is set at 1,470-1,480.

Company Brief

Ivory Properties Group Bhd signed an agreement on Wednesday to proceed with its disposal of a 1.22-acre (0.49-hectare) freehold land in George Town, Penang to Chin Hin Group Property Bhd for RM40m. The plot forms part of the Penang Times Square development, and will be used to develop a multi-storey residential project. The two groups on Dec 7 last year signed a binding term sheet for the deal, which will also see a member of the Ivory group appointed as the turnkey builder for the development. (The Edge)

Leader Steel Holdings Bhd’s (LSH) wholly owned subsidiary Ferronet Asia Sdn Bhd has accepted a notice of award and offer for compensation (Form H) from the Klang Land Office invoking a compulsory acquisition under the Land Acquisition Act 1960 (Act 486) to acquire 28,903 sq m of land in Mukim Kapar, Klang for RM42.56m cash. LSH said the compulsory disposal resulted from the receipt of Form H to take possession of the affected land under Section 18 of Act 486. LSH said the compensation consideration of RM42.56m included compensation for severance damages and loss of income. (The Edge)

Genting Malaysia Bhd announced that it will inject another US$100m (RM464.15m), through an indirect wholly-owned unit, into Empire Resorts Inc, in which it has already put in about US$624.4m to date. The latest capital injection will involve Genting Malaysia subscribing to 1,000 of Empire’s Series M preferred stocks. Empire plans to use the capital injection for working capital, and to pay off a US$58m bank facility. The Series M preferred stocks, with a maturity date of Dec 31, 2038, are convertible after end-2030 into 100m common Empire stocks at US$1 apiece. (The Edge)

Nestcon Bhd has clinched RM108m worth of construction works from property developer Exsim Avenue Sdn Bhd for a mixed commercial development project. Nestcon, through its wholly-owned unit Nestcon Builders Sdn Bhd, accepted a letter of award from Exsim Avenue on Wednesday. The work consists of main building works for a 37-storey mixed commercial development comprising retail shops, 220 strata office units, 126 units of service apartments, car parks and other relevant facilities. Contract works are to be completed within 39 months, commencing on Jan 15, and scheduled for completion by April 14, 2027. (The Edge)

Hextar Capital Bhd (formerly known as Opcom Bhd) has completed the acquisition of 49% stake in power industry engineering, procurement, construction and commissioning (EPCC) outfit Transgrid Ventures Sdn Bhd in a cash and share deal. The group said the acquisition marks the diversification of the group to include the power generation and transmission business. HexCap bought the stake from Datin Seri M Saraswathy A/P Manikum. Transgrid, which has a track record of developing electricity switching stations and substations, posted an unaudited net profit of RM3.87m in the four months ended April 2023, on revenue of RM40.19m in the same period. (The Edge)

Public Bank Bhd has withdrawn its lawsuit against Magma Group Bhd and Magma executive chairman Datuk Seri Ismail Farouk Abdullah, stemming from a dispute over the settlement of outstanding sums under various term loan and overdraft facilities. The withdrawal came after Magma’s unit made “a payment to Public Bank and had regularised payment of the facilities with Public Bank”. The High Court, in a case management on Tuesday, granted permission for Public Bank to withdraw the suit, with liberty to file afresh. (The Edge)

Leong Hup Feedmill Malaysia Sdn Bhd (LFM) and Dindings Poultry Development Centre Sdn Bhd (DPDC) have filed appeals against the Malaysia Competition Commission's (MyCC) decision to fine the two companies over alleged chicken feed cartel practice. MyCC had imposed a penalty of RM157.47m on LFM, and another RM70.02m on DPDC. Leong Hup International Bhd, which wholly owns LFM, announced that it had applied for a stay of the MyCC decision pending an appeal. (The Edge)

Selling pressures continue to pound stocks related to Datuk Dr Yu Kuan Chon, with Rapid Synergy Bhd hitting its limit down in Wednesday morning’s trading session on Bursa Malaysia, before paring some of its losses by afternoon break. Rapid Synergy fell as much as 30% to RM16.38 on Wednesday morning, before paring losses to trade at RM16.72, down RM6.68 or 28.6%, giving it a market capitalisation of RM1.79bn. The industrial mould manufacturer was the largest loser on Bursa Malaysia as at afternoon break, followed by YNH Property Bhd. YNH fell 45 sen or 13.6% to RM2.85 at market break, valuing the property developer at RM1.51bn. Dr Yu controls a 22.8% stake in Rapid Synergy and 32.6% of shareholdings in YNH. (The Edge)

Source: Mplus Research - 11 Jan 2024